© Reuters. Expedia (EXPE) Stock Drops 12% on Worse-Than-Expected Gross Bookings and FCF
(Updated: February 9, 2024, 12:47 pm EST)
Expedia (NASDAQ:) reported better-than-expected fourth-quarter earnings and revenue, but missed expectations for gross bookings and free cash flow.
The stock plunged 12% in after-hours trading Thursday.
For the fourth quarter, the travel technology company posted earnings per share (EPS) of $1.72, beating the consensus estimate of $1.67. The company's revenue totaled $2.89 billion, slightly exceeding the projected $2.87 billion.
Expedia generated $1.96 billion in retail revenue, up 4.5% year-over-year, but fell short of the expected $2.01 billion. Meanwhile, its business-to-business (B2B) segment saw substantial growth of 28% year-over-year, generating $864 million and surpassing the $809.7 million forecast.
The company reported negative free cash flow of $415 million for the fourth quarter, a 16% increase in cash burn compared to a year ago and significantly worse than the negative $192.6 million estimated.
In addition, gross reserves amounted to $21.67 billion, missing the $22 billion target set by analysts.
The company said it repurchased more than 19 million shares, representing a record $2 billion investment in share buybacks throughout 2023.
Expedia Group has named Ariane Gorin as its new CEO effective May 13, 2024. She will replace Peter Kern, who has led the company since 2020. Kern will remain involved as vice president and member of the board of directors once his term ends. term as executive director.
“We met our full-year guidance and delivered record results, while also completing a massive transformation and navigating the inherent volatility that comes with it. Our work is finally starting to pay off and we are in the best place we have ever been. found. been technologically,” said Peter Kern, vice president and CEO of Expedia Group.
In addition to its financial results, Expedia has unveiled its CEO transition plan, naming Ariane Gorin as its new CEO, effective May 13, 2024.
He will replace Peter Kern, who has led the company since 2020. Kern will remain involved as vice president and member of the board of directors after his term as CEO ends.
Reacting to the report, analysts at Jefferies lowered their price target on EXPE to $150.00 from $160.00 per share, maintaining a Hold rating on the stock.
They said EXPE's decision to lower FY24 reserve guidance and announce a CEO transition reduces their confidence in the company's turnaround.
“The first-quarter booking guidance also implies a sequential slowdown and growth in the second half of the year, a cadence that likely increases downside risk given that industry growth could slow throughout the year (our opinion),” the analysts wrote in a note. “We believe EXPE is once again a demonstration story and imagine shares will remain range-bound until growth accelerates again.”
